Market dynamics play into eNett’s hands

Travelport’s B2B payments business eNett has had another high-double-digit growth quarter and is well on track to deliver $500m in revenues in 2021.

CEO Gordon Wilson told tnooz that “all the market dynamics are right for this business” and “even the major OTAs are now offering prepayment options rather than pay at the hotel.” So when a customer books through an OTA and pays in advance, eNett’s B2B platform comes into play and facilitates the transfer of the payment from the OTA to the hotel.

The financials talked about eNett “taking a greater wallet share” from existing customers while continuing to add new ones.

Differentiation

The official statement talked about Travelport’s “continued investment in areas of differentiation”, one of which is search. Wilson explained that it was working with artificial intelligence and machine learning to focus the search on the areas most likely to convert. He also said that being able to host the cache in the cloud meant that it was able to “take out the latency” and generate a faster response.

And he added that this combination of cloud-based cache with AI/machine learning layers was helping its mobile product offering, another one of Travelport’s point of differentiation. “The screen real estate on mobile means that you have to be able to first of all filter out what is searched so that the response can be almost instant.”

Competitive landscape

But perhaps Travelport’s largest of area of differentiation with its traditional competitors, Sabre and Amadeus, is its almost complete focus on distribution. He explained that one benefit of this was that it is relatively capital light. “Almost everything we invest in is in distribution, whereas increasingly the others are putting capex into airline IT, and increasingly into the hotel space as well. Its that focus which means we are the only platform with access to the three major low costs carriers Ryanair, Southwest and Indigo.”

Financials

The “Travel Commerce Platform” was responsible for the vast majority of the second quarter total revenue of $662 million, accounting for $638 million which is a 9% increase on the same quarter last year. This is then broken down further into Air and Beyond Air.

Air revenues were up by 5% to $444 million, helped by “air share gains in Europe, Asia and Latin America”. Beyond Air was up by 21% to $194 million, of which eNett contributed $81 million net, an 82% increase on the same quarter last year. It said that standalone hotel room night bookings were up 2% and car bookings were flat.

Its attachment rate – the proportion of air bookings which included an accommodation booking – was down by 2% but still came in at 47%, and that there had been strong growth in air-only OTA bookings.

The other contributor is “technology services” which was down by 15% to $24 million following Travelport’s disposal of its interest in IGTS last April.

Wilson said that, despite being a relatively small part of its business, Travelport is committed to technology services as it “punches above its weight”. Tech services is almost entirely related to its relationship with Delta, whose core reservation and operations systems are hosted at Travelport’s data centre in Atlanta.

He said that this was “cost-effective” for Delta, because there is little additional and discrete costs for Travelport to pass on or factor into the commercials. With Virgin Atlantic now part of this set-up as well, and the recent addition of a disaster recovery component to the relationship, it remains an important part of the overall business.